Transcript FISCAL INTEGRITY Jennifer Paris, Fiscal Management Division

FISCAL INTEGRITY
Jennifer Paris, Fiscal Management Division
A presentation for
Best Practices in
Texas State Contract Management
October 5, 2011
What is “Fiscal Integrity”
Compliance with laws and rules
Adherence to budget
Risk identification and mitigation
Conservation of taxpayer funds
3% Fed Tax Withholding required on
most governmental vendor payments
(exceptions apply)
 Starts 1/1/2013 if not repealed in D.C.
 Government unit (i.e. state agency) is
liable for failure to withhold
 Complex procedural problems
Affecting Contract Management
IRS adopted rules and has training on its website. Go to
www.irs.gov
Currently, there is information here:
http://www.irs.gov/govt/fslg/article/0,,id=243336,00
.html
 Exempts contracts existing on or before 12/31/2012 for
one year
 Exempts payments (not contracts) under $10,000
 Certain vendors and programs are exempt
Compliance: Immediate To-Do’s
Keep up with IRS rules and Congressional
repeal efforts
Determine when and how your entity will
determine and manage vendor exemption
status (W9s?)
Determine how IRS’ guidance on contract
effective dates affects
– your contracting cycle
– your contract management data
BUDGET BUSTER
Will everything cost 3% more?
Texas
needs
YOU
to help Conserve Taxpayer Funds
Strategy #1: “JUST PAY NO”
Are your contracts
EXPLICITLY CLEAR
about when your entity
will NOT pay
for a good or service?
STATE PAYS MILLIONS
FOR FAILED PROJECT
Austin
A Contract Manager with the state’s
________ agency testified today in front of
the state’s Senate Finance Committee that
the contract only required the vendor to
What’s a bona fide dispute?
When the
documented expectations
are not met
Did you know:
A/P staff is not supposed to pay an invoice for
goods/services which are in dispute?
SIMPLE, EFFECTIVE
CONTRACT ENFORCEMENT
If your agreement (or the law)
says we won’t pay
DON’T PAY
Strategy #2: Look out for Mom’s
Money
Would you let your mom SIGN this
agreement?
Would you let your mom RENEW this
agreement?
Insurance & Performance Bonds
Make sure you know
1. How does your entity track and collect
on performance bonds?
2. How does your entity check for required
insurance and how often?
Strategy #3 Understand THIS state policy
and its purpose
PAYMENT SCHEDULING POLICY:
 Negotiable early payment schedule
Says that the state won’t pay until the latest
possible time
UNLESS
- A cost effective discount is offered
Or
- The contract defines an early payment date
LET’S MAKE A DEAL !!!!
Vendor
Look, I just need payment by the first of
each month.
Contract Negotiator
Let’s discuss that possibility.
We need 24/7 guaranteed service with
no extra service charges.
Strategy #4: Do the Math
DISCOUNTS and REBATES
Look great
Do the Math
“10/10 net 30” (wow!)
invoice date= day 1
“2% rebate on 10”
Mail time= day 2-5
Process Invoice= day 6-13
1. Know how the vendor computes a discount.
2. Do the math during any contract evaluation
Comptroller Tools for YOU
Discount calculator:
https://fmx.cpa.state.tx.us/fmx/purchase/disccalc
/index.php
Treasury “pool” earnings rates:
http://www.window.state.tx.us/treasops/poolrate
s/
Scheduling Resources:
https://fmx.cpa.state.tx.us/fm/usas/prompay/ind
ex.php
Just keep in mind…
You cannot negotiate the “late” payment date. The
state’s Prompt Payment law says:
it’s always 30 days past the LATER of
Invoice received
Or
Service Provided
Strategy #4: Don’t elude Controls
 Creating a P.O. after Receipt of Goods
“We are required to have one or the auditors will…”
”The computer made me do it”
 How could the vendor agree to its terms?
Verbal Agreements
Step 1: Acknowledge that they happen
As long as there are telephones and credit cards…
Step 2: Have a policy
POLICY STATEMENT – TRY THIS:
Employees must write verbal agreements down or
employee is liable for the amount (overage)
Step 3: Enforce the policy
Avoid Confusing Language
Simple English – and Spanish - works great !
 Clearly say what we want to procure
Does it have to be functional?
What happens if it is not functional?
Say the legal terms vs. just citing the law
“We will pay no earlier than 30 days after…”
 Say when we will NOT pay the bill
If agency may “terminate contract for any
reason”…
 Enforce the contract language
Note: Visually impaired people, like your presenter, don’t prefer small print
Strategy #5: Know thy Risks
Upset Taxpayer
HEADLINE RISK
LEGISLATIVE RISK
Risk Mitigation Made Simple
Think like a taxpayer
(you are one of them)
Treat every contract as if it is
YOUR OWN.
“I’m just the Contract Manager”
The words that you write
or do not write
into a contract
(and how the language is enforced)
directly affect the
Fiscal Integrity of the State
State Fiscal Management
Contacts
Purchase and Travel Compliance
Assistance for state agencies: (512) 475-0966
Payee/Payment Services (state funds):
(512) 463-3660
Jennifer Paris, Fiscal Integrity Analyst
(512) 475-1367